Since 2014
Computing Bond Values to Teach Time Value of Money Principles
Applied Finance and Accounting
View Archive Info| Field | Value | |
| Title |
Computing Bond Values to Teach Time Value of Money Principles
|
|
| Creator |
McGowan, Carl B.
Joyner, Donald T. |
|
| Description |
The objective of this paper is to demonstrate how to use bond valuation to teach students how to use a financial calculator. In this paper, a single bond issuance is examined using three different yields to maturity (i.e. market rates). The present values of a $1000 bond issue, valued with five years to maturity and a ten percent coupon rate, are determined using three different yields to maturity: 8% (which would result in a premium), 10% (which would result in neither a discount nor a premium), and 12% (which would result in a discount). The present value of the bond is determined by calculating the present values of both the coupon payment stream (an annuity) and the maturity value (present value of a lump sum) given three different situations. All three values are determined for each year as the time to maturity decreases. A discount (premium) from a change in the YTM is reduced each year until maturity. The results are shown in tables and graphed in Figure 2.
|
|
| Publisher |
Redfame publishing
|
|
| Contributor |
—
|
|
| Date |
2015-06-05
|
|
| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
|
| Format |
application/pdf
|
|
| Identifier |
http://redfame.com/journal/index.php/afa/article/view/862
10.11114/afa.v1i2.862 |
|
| Source |
Applied Finance and Accounting; Vol 1, No 2 (2015); 64-72
2374-2429 2374-2410 |
|
| Language |
eng
|
|
| Relation |
http://redfame.com/journal/index.php/afa/article/view/862/815
|
|